Two major institutions warn of rising recession risks, US oil fell by more than 2% and fell below the 90 mark
On Tuesday (October 11), Brent oil futures fell 2% to stand at $ 94.29 a barrel. Investors are increasingly concerned about the increased risk of a global recession and demand could be put under pressure. Meanwhile, a surge in the COVID-19 outbreak in the Asian consumer powerhouse has further affected demand.
In its World Economic Outlook, the IMF further downgraded its global growth forecast for 2023, predicting that countries that cumulatively account for a third of global output could slide into contraction next year. Pierre-Olivier Gourinchas, chief economist of the IMF, said in a statement that the two big economies of the US and the euro zone will continue to stagnate. In short, the worst is yet to come and 2023 will look like a recession for many.
IMF expects global gross domestic product growth to slow to 2.7% next year, down from 2.9% growth forecast in July as rising interest rates slow the US economy and Europe struggles to cope with the surge in oil prices. It left its growth forecast for 2022 unchanged at 3.2%, as European manufacturing was stronger than expected and the US was weak. In 2021, the global growth rate will reach 6.0% as the COVID-19 pandemic subsides.
World Bank President Malpass said there is a real risk and danger of a global recession next year. Slowing growth in advanced economies, rising interest rates, climate risks, and constantly high food and energy prices have hit developing countries particularly hard.
Craig Erlam of OANDA brokerage said: “Pessimism in the market is growing now. Oil prices have soared earlier this year as the Russian invasion of Ukraine exacerbated supply concerns, pushing Brent. close to an all-time high of $ 147, but oil prices have fallen due to economic concerns.
Oil was also put under pressure by a strong dollar, which reached multi-year highs due to concerns about rising interest rates and an escalation of the war in Ukraine. A strong dollar makes oil more expensive for buyers using other currencies and tends to dampen risk appetite.
However, the losses were limited by a tight market and last week’s decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, OPEC +, to lower its production target by 2 million barrels per day. The decision comes as a blow to Biden, who tried to lower crude oil prices ahead of the winter and expressed disappointment at the move. Putin insisted that the decision by OPEC and its allies was aimed at stabilizing the global energy market and was not aimed at anyone. Russian Deputy Prime Minister Alexander Novak said last week that Russia will not send crude oil to countries that respect the quota and could cut production as a result. The move could further squeeze global oil markets, causing prices to skyrocket.
Days before OPEC and its Russian-led allies announced massive production cuts, US officials called Saudi and other Gulf producers to urgently ask for another month’s delay, people familiar with the matter said. . But the answer was: “No”. US officials warned Saudi leaders that a production cut would be seen as a clear choice for Saudi Arabia to side with Russia in the conflict with Ukraine, a move that would undermine already declining U.S. support for the kingdom. , people familiar with the matter said. Saudi officials have rejected the demands, which they see as a political ploy by the Biden administration to avoid bad news ahead of the mid-term elections in the United States, where high oil prices and inflation have been at the heart of the campaign.
The White House has said that there is no timetable for the US to review Saudi policy and that we will make a decision once Saudi policy is reviewed. Asked if Saudi Arabia was aligned with Russia over Ukraine, a White House spokesperson said the United States viewed the OPEC + decision as a sign of alignment with Russia.
(US Oil Hourly Chart)
